Chips stocks close sharply higher

MichaelPaige

The Philadelphia Semiconductor Index
SOX, -1.95%
tacked on 2.5 percent to close at 393.10. The Goldman Sachs Hardware Index
$GHA
added 0.8 percent to end the session at 248.20.

Shares of Broadcom
BRCM
rose $2.60, or 9.4 percent, to $30.30. The maker of broadband communications chips warned that third-quarter sales would fall short of expectations, but encouraged investors by saying the slowdown is temporary and would not affect profit margins.

Broadcom expects revenue for the period to be flat to slightly higher than the second quarter's $641 million, as some customers requested that the delivery of orders be delayed due to excess inventory. Previously, the company had forecast a rise to $673 million to $680 million. See full story.

LSI Logic
LSI, -0.43%
shares dropped in after-hours trading after the company cut its third-quarter outlook, citing customer inventory build-up. The Milpitas, Calif.-based semiconductor company said it now expects a net loss in the range of 14 cents to 17 cents a share for the period. LSI previously expected to break even or lose up to 3 cents a share.

The stock changed hands at $4.82 in after-hours action. In the regular session, it closed up 6 cents, or 1.2 percent, at $5.25.

LSI expects revenue to be between $370 million to $400 million, down from its previous forecast of $435 million to $465 million.

Excluding one-time items, LSI expects a loss in the range of 4 cents to 7 cents a share.

Altera
ALTR, +0.00%
said its board approved a 10 million share increase to the number of company shares authorized for repurchase. There are now 21.9 million shares authorized by the board of directors for repurchase, it said. The company's shares rose 93 cents, or 4.8 percent, to $20.35.

On the downside, Gateway
GTW
lost 12 cents, or 2.5 percent, to $4.70. The computer maker reiterated its prior third-quarter outlook and said it expects to breakeven or post earnings on a per share basis in the fourth quarter. See full story.

Hewlett-Packard
HPQ, -1.32%
gained 40 cents, or 2.2 percent, to $18.61. The company won a $290 million five-year contract from the Defense Logistics Agency to provide IT infrastructure. The agreement includes one-year options for another five years.

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